U.S. Herd Expansion Slowed in 2017

The USDA-NASS Cattle report was released last week and it reports the annual cattle inventory estimates for the U.S. There were no big surprises found in this report but it does provide support for the projections that cattle inventory is still expanding but at a slower rate than in past years.

Dissecting this report gives us a little more detail on specific numbers that are of interest to producers. The U.S. beef cow inventory was up 1.6 percent over January 1, 2017, to 31.7 million head. Perhaps the most positive (for prices) indication from this report was that beef replacement heifers were down 3.7 percent from last year to 6.1 million head. While beef replacements may have shrunk in 2017, this should not be confused with herd declines. Rather it should be attributed to slower growth during 2017. What does this mean for 2018? It’s hard to make very strong conclusions. Some will look at this report and suggest that herd expansion will end during 2018. However, the data suggest that low levels of expansion are still possible and maybe likely.

The 2017 calf crop was 2 percent larger at 35.8 million head. The current larger beef cow inventory has set the stage for a larger calf crop in 2018. The report also showed feedlot inventory 7.2 percent to 14 million head. This feedlot inventory number is a little different from the monthly cattle on feed number because it includes all feedlots while the monthly report only surveys feedlots with over 1,000 head capacity.

We’ll dig into some of the state-by-state breakdowns next week. But my primary takeaway from this report is that any beef herd expansion in 2018 would likely be limited. However, that will obviously be driven by market conditions in 2018.